Title : Study on Implementation of Kisan Credit Card Scheme Published by : Department of Economic Analysis and Research (DEAR) NABARD, Head Office Mumbai Date of Publishing : December 2016 Design & Printing : M/s Alco Corporation Place of Printing : Mumbai Number of copies : 1000 Contact : Plot No. C-24, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051 India. Tel: +91 22 26523617 Website : www.nabard.org, www.youtube.com / nabardonline (C) 2016 National Bank for Agriculture and Rural Development Unless otherwise stated in this document, no part of this document may be reproduce or transmitted in any form by any means without the written authorization from NABARD. Ôãã½ããä¾ã‡ãŠ ãä¶ãºã¶£ã - 64 Occasional Paper – 64 ãä‡ãŠÔãã¶ã ‰ãñŠãä¡› ‡ãŠã¡Ã ¾ããñ•ã¶ãã ‡ãñŠ ãä‰ãŠ¾ãã¶Ìã¾ã¶ã ¹ãÀ ‚㣾ã¾ã¶ã Study on Implementation of Kisan Credit Card Scheme ____________________________________________________________ —ãã¶ãñ¶³ ½ããä¥ã Gyanendra Mani _________________________________________________________ ‚ãããä©ãÇ㊠ãäÌãÍÊãñÓã¥ã ‚ããõÀ ‚ã¶ãìÔãâ£ãã¶ã ãäÌã¼ããØã Department of Economic Analysis and Research ÀãÓ›Èãè¾ã ‡ãðŠãäÓã ‚ããõÀ ØãÆã½ããè¥ã ãäÌã‡ãŠãÔã ºãú‡ãŠ National Bank for Agriculture and Rural Development ½ãìâºãƒÃ Mumbai 2016 —ãã¶ãñ¶³ ½ããä¥ã Gyanendra Mani ãäªÔ㽺ãÀ 2016 December 2016 ¹ãñ¹ãÀ ½ãò ã䪆 Øㆠ¦ã©¾ããò ‚ããõÀ ̾ã‡ã‹¦ã ãä‡ãŠ† ãäÌãÞããÀãò ‡ãñŠ ãäÊㆠÀãÓ›Èãè¾ã ºãö‡ãŠ „§ãÀªã¾ããè ¶ãÖãé Öõý The usual disclaimer about the responsibility of the National Bank as to the facts cited and views expressed in the paper is implied ÀãÓ›Èãè¾ã ‡ãðŠãäÓã ‚ããõÀ ØãÆã½ããè¥ã ãäÌã‡ãŠãÔã ºãö‡ãŠ National Bank for Agriculture and Rural Development ‚ãããä©ãÇ㊠ãäÌãÍÊãñÓã¥ã ‚ããõÀ ‚ã¶ãìÔãâ£ãã¶ã ãäÌã¼ããØã, Department of Economic Analysis and Research Þããõ©ããè ½ãâãä•ãÊã, `Ôããè' ãäÌãâØã, ¹Êããù› ¶ãâ. Ôããè-24 4th Floor, ‘C’ Wing, Plot No. C-24, `•ããè' ºÊããù‡ãŠ ¹ããñ. ºããù‡ã‹Ôã ¶ãâ.8121 G-Block, PB No. 8121, ºããâ³ã-‡ãìŠÊããà ‡ãŠãù½¹Êãñ‡ã‹Ôã, ºããâ³ã (¹ãîÌãÃ) Bandra-Kurla Complex, Bandra (East) ½ãìâºãƒÃ - 400 051 Mumbai - 400 051 ÀãÓ›Èãè¾ã ‡ãðŠãäÓã ‚ããõÀ ØãÆã½ããè¥ã ãäÌã‡ãŠãÔã ºãö‡ãŠ, ‚ãããä©ãÇ㊠ãäÌãÍÊãñÓã¥ã ‚ããõÀ ‚ã¶ãìÔãâ£ãã¶ã ãäÌã¼ããØã, Þããõ©ããè ½ãâãä•ãÊã, `Ôããè' ãäÌãâØã, ¹Êããù› ¶ãâ. Ôããè-24,`•ããè' ºÊããù‡ãŠ ¹ããñ. ºããù‡ã‹Ôã ¶ãâ.8121, ºããâ³ã-‡ãìŠÊããà ‡ãŠãù½¹Êãñ‡ã‹Ôã, ºããâ³ã (¹ãîÌãÃ), ½ãìâºãƒÃ - 400 051 ´ãÀã ¹ãƇãŠããäÍã¦ã. Published by National Bank for Agriculture and Rural Development, Department of Economic Analysis and Research, 4th Floor, ‘C’ Wing, Plot No. C-24, G-Block, PB No. 8121, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051 ‚ãʇãŠãñ ‡ãŠã¹ããñÃÀñÍã¶ã, ½ãìâºãƒÃ ´ãÀã½ãìã䳦ã Printed by Alco Corporation, Mumbai Tel.: 022 4097676 Contents Foreword................................................................................................................ i Acknowledgement ................................................................................................ iii Abbreviations ........................................................................................................ iv Summary and Recommendations ....................................................................... 01 1. Introduction ............................................................................................... 12 2. Progress in KCC Financing ......................................................................... 22 3. Implementation of Revised KCC Scheme .................................................... 32 4. Issuance of ATM/ RuPay Debit Cards ......................................................... 52 5. Kisan Credit Card Scheme: Macro Impact ................................................. 73 Annexures ........................................................................................................... 76 FOREWORD isan Credit Card (KCC) is one of the many innovative banking products designed Kby NABARD with an objective to enable farmers to meet their credit requirements, preferably production credit, from financial institutions in a timely and hassle-free manner. The KCC scheme which was introduced in 1998, has gone through several changes since then and now incorporates many new features over & above the financing of crop production requirement, viz., consumption expenditure, maintenance of farm assets, term loan for agriculture & allied activities, coverage of KCC holders under Personal Accident Insurance Scheme (PAIS) and very recently the coverage of KCC holders under Atal Pension Yojna, etc. Today KCC is considered to be one of the most convenient banking products for the farmers. The present study aimed at finding out as to whether the present features of Kisan Credit Card Scheme are serving its intended purpose or not. The report has come out with many interesting findings and concludes that the implementation of KCC scheme has benefitted the farmers to a great extent and the farmers are able to generate profit, albeit in varying quantities. The study has also highlighted some concerns relating to the implementation of the scheme in light of the revised guidelines but these do not seem to be affecting the prospects of farmers getting the KCC loans from the bank and making the best use of it for crop cultivation. The study has also indicated that Interest Subvention as well as incentives for prompt repayment have positive impacts on the agricultural income of farmers covered under KCC scheme. The slow progress on use of RuPay Cards by farmers on account of their not being comfortable with use of ATM cards and also their apprehension/ fear of frauds and trust issues i.e., likely misuse by their family members suggests need for enhanced efforts on financial counselling, particularly of illiterate farmers. I hope, the banks will now actively promote use of RuPay cards by farmers in the wake of government thrust on digital payment. I hope the findings of the study as well as the recommendations suggested by the author would by very useful for the policy makers and bankers. NABARD, on its part has already reviewed the report and is now working on various models so as to find out if any further improvement can be made in the existing guidelines to make it more farmer friendly. H R Dave Deputy Managing Director i ii ACKNOWLEDGEMENT Supporting the efforts of Government of India in helping farmers to pursue a decent & sustainable livelihood as well as the institutions engaged in facilitating such efforts has been one of the major objectives NABARD is mandated to address to. Review of various policy guidelines framed and issued by it and making suitable amendments from time to time is an ongoing process at NABARD so that the policies/guidelines remain relevant and useful to the users. The author is extremely grateful to Dr Harsh Kumar Bhanwala, Chairman and Shri H R Dave & Shri R Amalorpavanathan, Deputy Managing Directors, NABARD for their support, guidance and encouragement during the course of the study. The author is also thankful to Shri M V Ashok, Chief General Manager, Deptt of Economic Analysis & Research (DEAR) Shri Subrata Gupta, CGM, DFIBT and Shri B V S Prasad, General Manager, DEAR, NABARD for their support & guidance during conduct of the study. The author is also thankful to the CGMs & other officers of Assam, Bihar, Karnataka, Maharashtra, Punjab and Uttar Pradesh Regional Offices of NABARD for facilitating the study team for smooth conduct of the field visits in their respective states. The author sincerely thanks & appreciates the hard work done by all the officers involved in collection & compilation of field data in the sample states viz., Assam (Shri Greville N Kharlukhi, Manager, DEAR, HO & Ms. Anannya Das, Manager, Assam RO), Bihar (Shri Gautam K Singh, AGM, DFIBT, HO along with the undersigned), Karnataka (Shri M Gopalkrishna Bhat & Shri J M Dhananjaya, Independent Consultants and Shri Srinivasan Ramesh, AGM-DD, Dakshina Kannada & Shri S K Bharadwajam Manager- DD, Bellary), Maharashtra (Shri S D Nalawade, AGM, Maharashtra RO; Shri Pankaj Kumar Tripathi, Manager, & Smt Samidha S Shinde, Asstt Manager, DFIBT, HO); Punjab (Shri Om Pal, Manager, Haryana RO & Shri Rasheed Lekhi, Asstt Manager, Punjab RO) and Uttar Pradesh (Smt Suparna Tandon, DGM, RMD, HO & Ms. J R Blah, AGM, DFIBT, HO). The author extends thanks to the District Development Managers of NABARD of all the 12 sample districts for providing input and helping the study team during the field visits. The author would like to make special mention and thank the help and support received from Shri Pushpinder Singh (Head-Financial Inclusion & New Business), Shri V Ratnakar (Associate Vice President – Cooperative Banks) and Shri Rajeev Aggarwal (Manager – Financial Inclusion and New Business) of National Payment Corporation of India, Mumbai who provided good amount of data/information pertaining to issuance of RuPay Cards. The author also take this opportunity to thank all the officers and staff of controlling offices, branches of commercial banks, RRBs, Cooperative Banks & PACS covered in the study for providing necessary data/ information & help in collection of field data from the identified farmers. The author is truly indebted to all the sample farmers who spent their precious time and provided useful information to the study team which helped the undersigned to come out with this meaningful report. Gyanendra Mani Author iii ABBREVIATIONS Atal Pension Yojna .............................................................................................. (APY) Application Service Provider .............................................................................. (ASP)